DAILY REPORT ON RUSSIA

AND THE FORMER SOVIET REPUBLICS

INTERCON INTERNATIONAL USA, INC., 725 15th STREET, N.W., SUITE 908,

WASHINGTON, D.C. 20005 -- 202-347-2624 -- FAX 202-347-4631

Daily intelligence briefing on the former Soviet Union

Published every business day since 1993

Monday, October 20, 1997

Tuleev Wins Governorship of Kemerovo

· Incumbent Governor Aman TULEEV won gubernatorial elections in Siberia's Kemerovo Region on Sunday with 94.5 percent of the voted, reported Russian independent television NTV. His main opponent, regional Duma deputy Viktor MEDNIKOV, received only two percent of the vote. Voter turnout was high, according to the regional electoral commission.

Tuleev was appointed as the region's governor by President Boris YELTSIN in July, after the former appointee to the post was dismissed. At that time, TULEEV, a former Duma deputy in the Communist Party faction, was serving as CIS Affairs Minister. TULEEV had previously served as chairman of the Kemerovo regional legislature. Sunday's elections make him the region's first elected governor.

Rokhlin Planning Government Overthrow?

· Russian State Duma defense committee chairman General Lev ROKHLIN caused a furor on Sunday when he announced his new political movement would go ahead with plans to oust President Boris Yeltsin from office. Addressing his Movement in Support of the Army, Defense Industry, and Military Science, Rokhlin said the group would carry out its "mission" to overthrow "the hated regime" by next spring, reported Interfax.

On February 23, the organization plans to hold a kind of "rehearsal with the aim of determining whether there is enough accumulated strength to

Russian Federation

Politics

Yeltsin Averts No Confidence Vote

· The Russian government seems to have staved off another no confidence vote, scheduled to take place in the Russian State Duma on Wednesday, by agreeing to hold further talks on issues of conflict with parliamentary leaders. President Boris Yeltsin today met with Prime Minister Viktor Chernomyrdin and the speakers of both houses of parliament—Gennady SeleznyEv and Yegor Stroyev—to discuss the latest disputes between the executive and the legislature.

Following the meeting, Seleznyev said that the Duma might withdraw the no confidence motion in light of concessions promised by the government. He said that YELTSIN had accepted Communist demands to hold talks between the four leaders twice a month and to start "round table" talks, between the government and the Duma faction leaders, as soon as possible. The government also reportedly agreed to send the controversial Tax Code to a conciliation committee for reworking.

Canada's Chretien in Moscow

· Canadian Prime Minister Jean CHRETIEN arrived in Moscow on Saturday for a four-day visit. Following talks with President Boris Yeltsin at his Rus dacha outside Moscow today, the two leaders made a joint statement on the anti-personnel landmine ban convention. The statement said that YELTSIN informed the Canadian premier that Russia would to extend a current moratorium on the export of mines until the convention is signed, said Itar-Tass.

He also said he would not rule out attending a conference in Ottawa in December, during which some countries will sign the convention.

Today's News Highlights

Russia

Rokhlin Getting Dangerous?

This Week's Happenings

Russian Envoy to NATO Named

Russia Missile Parts to Iran

Soros to Give Russia $500 Mln

Seagram in Russia TV Deal

South Caucasus & Central Asia

USAID Worker Killed in Georgia

Russia Blamed for Radiation

Shevardnadze on Eco. Reform

Politics-Economics-Business

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October 20, 1997

Intercon's Daily

throw the regime out by the scruff of its neck," Interfax quoted Rokhlin as saying. Rokhlin did not say what form this "rehearsal" would take.

In the Soviet era, February 23 was celebrated as Soviet Army Day. It is now known as the Day of the Defenders of the Fatherland and big nationalist and communist rallies are held.

The Movement, which was created in September to oppose Yeltsin's military reforms and force him to step down by non-violent, constitutional means, has branches in 42 regions of the country, according to ROKHLIN. "Committees are being set up everywhere to provide constitutional support for servicemen ready to sent their units to Moscow for help and support," ROKHLIN told supporters.

Most Western and Russian military analysts consider Rokhlin to be a potential irritant, but not a threat at this stage. It is difficult to guage how much real support ROKHLIN has among the Russian armed forces, but his increasingly threatening and strident attacks against the YELTSIN government are causing some concern.

Aleksandr Shokhin, head of the pro-government Our Home is Russia parliamentary faction told Interfax today that Rokhlin's remarks were unconstitutional and incompatible with his role as a parliamentary deputy. ROKHLIN was elected to the Duma on the Our Home ticket, but left the party last month citing differences with its leadership and platform.

Rokhlin's comments "are beginning to turn more and more into unconstitutional extremism,'" Shokhin was quoted by Interfax as saying. He also said prosecutors would sooner or later react to Rokhlin.

Ekho Moskvy radio quoted a judicial source as saying Rokhlin's comments could fall under an article of the criminal code that outlaws "public calls for the violent change of the constitutional structure of the Russian Federation." Those convicted face up to five years in prison.

Russian Military Envoy to NATO Named

· Russian Defense Minister Igor Sergeyev announced today that Lieutenant-General Viktor Zavarzin, deputy chief of staff for military coopera

This Week's Happenings

¨ Western Siberian Governors Yuri NEYELOV of the Yamalo-Nenets Autonomous Okrug and Aleksandr FILIPENKO of the Khanti-Mansy Autonomus Okrug will speak at Columbia University in New York on October 21. The governors will also visit Washington while in the US.

¨ The Black Sea Economic Cooperation (BSEC) Economic Forum, to be hosted this year the Ukrainian government, will take place in Kiev on October 21-22. The BSEC includes Albania, Armenia, Azerbaijan, Bulgaria, Georgia, Greece, Moldova, Romania, Russia, Turkey, and Ukraine.

¨ A group of planners from OSCE headquarters in Vienna arrives to Baku, on October 20 to continue preparations for the possible introduction of peacekeepers into the conflict zone of Nagorno-Karabakh. Peacekeepers could be introduced after a political settlement is signed. The group, which includes military representatives of France, Russia, Turkey, Ireland, and Denmark and an OSCE representative, will meet Azeri President Geidar Aliyev and Foreign Minister Hasan Hasanov. From October 21-23, the group will go on a fact-finding mission to a number of Azeri regions.

¨ The chief of the Russian army General Staff Anatoly Kvashnin will participate in the NATO Council meeting on October 23. The meeting will focus on a potential program of military cooperation between NATO and Russia.

¨ Lithuanian President Algirdas Brazauskas will visit Russia from October 23-25. Brazauskas is expected to meet President Boris Yeltsin, Prime Minister Viktor Chernomyrdin, and other Russian officials. The two sides will sign an agreement on the border between the two countries. This will be the first visit of a Lithuanian president to Russia in five years.

¨ On October 23, President Boris YELTSIN will take part in a CIS Summit in Kishinev.

¨ Russia will switch to "winter" time on October 26 by putting its clocks back one hour at 3:00am.

When you need to know it as it happens

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tion within the Commonwealth of Independent States (CIS), will be appointed Russia's military envoy to the NATO, reported Itar-Tass. The head of the Russian general staff Anatoly Kvashnin will go to the NATO headquarters in Brussels on Thursday to introduce Zavarzin into his new posting.

Russia Selling Missile Metals to Iran

· According to a "secret" US intelligence report, the Russian Scientific and Production Center Inor signed an agreement with an Iranian factory last month to provide four special metal alloys using in long-range missiles, reported the Washington Times today. The report outlines Inor's efforts to market the four alloys to Iran's Instrumentation Factories Plan, part of the Iranian Defense Industries Organization. "With an eye to establishing a long-term business relationship, the Russian firm offered to give the Iranian firm a discount on the total value of the invoice," the Times cited the report as saying.

The report contradicts Russian officials recent denials that Moscow has no involvement in the Iranian missile program.

Last week, the Washington Times reported that the CLINTON administration was considering the imposition of sanctions against several Russian companies and research institutes which sold missile technology to Iran that could violate the Missile Technology Control Regime (MCTR).

According to Intercon sources, the House International Affairs Committee on October 24 will consider a vote on legislation to cut off aid to Russia because of sales of missile parts and technology to Iran.

Economy

Ruble = 5,878/$1.00 (NY rate)

Ruble = 5,878/$1.00 (CB rate)

Ruble = 5,859|5,897/$1.00 (buy|sell rates)

Soros to Donate $500 Mln to Russia

· US billionaire George Soros said on Sunday he will donate up to $500 million to Russia over the next three years to help improve health care, expand education, and retrain the military for civilian jobs, reported today's New York Times. In a phone interview from Moscow, SOROS said he would announce an initiative in eight charity areas today.

Since 1994, SOROS has spend more than $259 million to support the Russian offices of his Open Society Institute, which seeks expand civil liberties. The $500 million gift will make him the leading philanthropist in Russia, far exceeding the US presence—the US government gave Russian $94 million in foreign aid last year.

In addition to his philanthropy, Soros Fund Management has invested more than $2.5 billion in Russian business, making him the leading Western investor in that country, according to the Times.

Russia Seeks for Equipment for Bakeries

· The Russian ministry of agricultural production has launched a $240 million program to purchase foreign equipment for Russian bakeries, ministry official Vladimir SayEnko told Prime-Tass on Friday. Negotiations with several foreign companies on funding the project are in progress. Investors will be offered stock in the bakeries, said Sayenko.

Business

Seagram to Invest in Russian Television

· Universal Television, a unit of Seagram Co., is expected to announce today that it is making a major investment in Russian broadcaster StoryFirst Communications Inc., making it the first US TV studio to produce shows for the Russian market, reported today's Wall Street Journal. Universal plans to invest about $10 million as part of a total $70 million financing package for StoryFirst, which reaches about 60 million viewers in 174 Russian cities. The other $60 million will come from institutional investors like CS First Boston, Mercury Asset Management, and Morgan Stanley Asset Management.

Under the agreement, Universal will produce original programming for StoryFirst's stations, in addition to licensing rights for its US-made dramas, including "New York Undercover" and "Team Knight Rider."

Privately-held StoryFirst expects to add 100 cities to its distribution over the next 18 months.

South Caucasus & Central Asia

USAID Worker Killed in Georgia

· A US foreign aid worker in Georgia was killed in a car crash over the weekend that also left another

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American and two Georgian citizens seriously injured, reported United Press International (UPI) today. US Embassy officials said that 65-year-old David Bronheim worked as a senior consultant with the US Agency for International Development (USAID), but was not a government employee.

Another American, 50-year-old Michael Goldstein, and two Georgian citizens working for the American Embassy, were hospitalized in serious condition after their car crashed into a truck four miles west of Tblisi.

According to Intercon sources, the accident was a blow to Georgia as BRONHEIM was highly-regarded by the country's parliament, having worked closely with the Judiciary Committee on legal reform.

Georgia Criticizes Russia for Radiation Problem

· The Georgian parliament has demanded that Russia assume political responsibility for a recent incident in which Georgian border guards got radiation sickness from 15 radioactive containers left on Georgia territory by departing Russian forces, reported Russian independent television NTV today. Some 15 Georgian servicemen were exposed to high degrees of radiation earlier this month, when they discovered radioactive containers that were abandoned near a former Soviet military base in the Tblisi suburb of Lilo.

The chemical department of the Caucasus Military Forces of the former Soviet Union was located on Georgian territory before it withdrew in May 1997. A report filed when the department left detailed the equipment it was leaving behind, but made no mention of the radioactive containers, left in an area that was turned into a training base for border guard cadets, said NTV. The containers were found in an area of the training base designated for Georgian soldiers' recreation and smoking.

President Eduard SHEVARDNADZE has designated funds for the three sickest soldiers to be treated in

Germany. The others will apparently be treated at home, although many countries have offered help.

Some of the containers, which held cesium-137, were so corroded they were almost open. Radiation levels in some areas of the Lilo base reached 13,000 roentgens per hour, said Shuri ABRAMIDZE, head of Georgia's Nuclear Research Center. The permissible level is 20 roentgens per hour.

Georgian officials believe that more capsules have been left hidden under the earth or strewn about other military bases, reported the Associated Press (AP). They already found chemical poisoning of the soil in Anakliya, a village near the Lilo base.

Georgia has set up commissions to investigate the presence of the radiation at Lilo and to check out all former Soviet installations in Georgia.

Georgia Announces Further Eco. Reform

· Georgian President Eduard SHEVARDNADZE announced on Sunday that Georgia is entering the second stage of its economic reform, which will be concluded by the year 2000, reported Interfax. Speaking at an enlarged Cabinet meeting, Shevardnadze said the purpose of the reform is to raise living standards, eradicate poverty, reduce unemployment, and stimulate investment. The reform also aims to maintain the country's food sufficiency, support and upgrade industries, and speed up the privatization of major businesses.

The reforms requires the gross domestic product (GDP) per capita to grow by 8-10 percent annually with the national budget deficit of under three percent of GDP, said the president.

Shevardnadze noted the special attention will be paid to improving the country's balance of payments. The reform plan calls for exports to grow 8-9 percent faster than imports, boosting tax budget revenues by 15-16 percent against GDP, and further improving financial and banking institutions.

Paul M. Joyal, President, Editor in Chief Clifton F. von Kann, Publisher Ellen Shapiro, Managing Editor

Svetlana Korobov, Contributing Editor

Daily Report on Russia is published Monday-Friday (excluding holidays), by Intercon International, USA. Subscription price for Washington, D.C. Metro area: $895.00 per year. A discount is

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